Backing off F-35 risks Canadian jobs, industry says

MONTREAL – Canadian companies employing thousands of workers would be hurt if the Harper government abandons the multibillion-dollar purchase of F-35 fighter planes, the head of aerospace cluster Aero Montreal said Friday.

Aero Montreal chairman Gilles Labbe said the aircraft’s lead manufacturers, Lockheed Martin and Northrop Grumman, could remove work destined to be completed in Canada by members of the global supply chain if the federal government doesn’t buy the 65 planes.

“If Canada will not buy this airplane at the end of the day, this could of course impact the future business that we would get on the F-35,” he told reporters at Aero Montreal’s annual meeting.

Labbe is also head of Heroux-Devtek, the company slated to provide landing gear for all of the F35s destined for Canada as well as for many outside the country as well.

The Conservative government froze spending on the defence program earlier this month after the auditor general produced a withering report accusing the Department of National Defence of keeping Parliament in the dark about the program’s spiralling problems.

Michael Ferguson pegged the projected 20-year cost of the program, including maintenance, at $25 billion.

The government has said it expects to pay US$75 million per aircraft. But others, including Canada’s parliamentary budget officer, have said the actual cost could be close to double that figure.

The Joint Strike Fighter has been plagued by delays and technical problems that have caused costs to soar by 64 per cent.

Labbe said Heroux-Devtek’s contracts will continue in the United States but that work done in Canada by it and other F-35 suppliers could be shifted outside the country if the government’s commitment evaporates.

Unwilling to speculate on what Ottawa and other countries will decide, Labbe said he believes the entire program will ultimately go ahead and deliver more than 3,000 aircraft in the long term.

The United States, however, has reduced the number of aircraft it will purchase in the short term.

That will have an impact on Heroux-Devtek, but “nothing that we cannot cope with,” he said.

Overall orders should be flat in 2012 and start ramping up a little in 2013 and more in 2014.

“But we believe that three, four, five years down the road there will be more F-35’s sold than today and Heroux-Devtek and many other companies in Canada will benefit from that.”

Aero Montreal CEO Suzanne Benoit said the association has told Ottawa that a clear commitment is needed to the F-35 program so that “Quebec businesses can position themselves and profit from business opportunities that will arise.”

Meanwhile, the aerospace industry has started to recover from the global economic crisis with increased commercial aircraft production and orders for business jets, Benoit said.

She expects that about 3,600 jobs will be created in Quebec this year, erasing the up to 3,000 jobs lost in the 2009 downturn.

Hiring will take off when assembly of Bombardier’s (TSX:BBD.B) CSeries commercial jet begins ahead of its projected delivery by the end of 2013.

“It’s going to be massive in terms of a need for the industry,” added Labbe.

He also hopes WestJet Airlines (TSX:WJA) ultimately selects Bombardier’s Q400 for its planned regional service over Europe’s ATR.

The Toronto assembled Q400 is larger and travels faster than its rival. But the ATR has won substantially more orders in the past year because the smaller aircraft is more fuel efficient and cheaper to purchase.